NETWORK PERSPECTIVES ON SHOWROOMING

Transcription

1 Uppsala University Department of Business Studies Master thesis spring semester 2014 NETWORK PERSPECTIVES ON SHOWROOMING Examining Trust and Commitment in the Hair Care Industry Authors: Engqvist, Emma Jorstedt, Jakob Supervisor: David Sörhammar

2 ABSTRACT TITLE: Network Perspectives on Showrooming - Examining Trust and Commitment in the Hair Care Industry AUTHORS: Engqvist, Emma & Jorstedt, Jakob LEVEL: Master thesis DATE: SUPERVISOR: David Sörhammar INSTITUTION: Department of Business Studies TOTAL AMOUNT OF WORDS: Consumers are increasingly adopting new ways of purchasing and consuming hair care products, utilizing multiple channels (showrooming) in a hair care market where E-commerce actors are increasingly offering premium products at low price points. While previous research has extensively portrayed consumers as the central actor and villain of showrooming, this paper has instead focused its purpose and empirical investigation on the actions and relationships between consumers, hairdressers, L Oréal Redken and E-commerce as actors in the network of showrooming, applying a business network perspective. This paper focuses specifically on the relationship between hairdressers and L Oréal Redken, using a dyadic research methodology that improves upon previous research of showrooming that often have limited their studies to only one side of the relationship. Disproportionate levels of trust and commitment are uncovered which are also shown to be manifested in relationships with consumer and E-commerce actors, strengthening the view that understanding showrooming also requires insight of relationships in the network. KEYWORDS: Business network, trust, commitment, benevolence, credibility, showrooming, relationship marketing, hair care, L Oréal, Redken

3 CONTENT 1. INTRODUCTION RESEARCH QUESTION THEORETICAL FRAMEWORK BUSINESS NETWORK THEORY THEORY OF COMMITMENT AND TRUST TRUST Trust in Business to Business Relationships Benevolence and Credibility Trust Trust in Business to Consumer Relationships COMMITMENT Commitment in Business to Business Relationships Commitment in Business to Consumer Relationships SUMMARY OF THEORETICAL FRAMEWORK METHOD PRE-STUDY ACTORS IN THE STUDIED BUSINESS NETWORK An Introduction to L Oréal Redken Hairdressers and Hair Salons in Sweden E-commerce Actors Selling Redken Products Hair Care Consumers in Sweden RESEARCH DESIGN MEASURING TRUST AND COMMITMENT MEASUREMENT INSTRUMENTS SAMPLING SURVEY OUTCOME FACTOR ANALYSIS QUANTITATIVE CONSIDERATIONS PEARSON CORRELATION AND CALCULATING MEANS ABOUT THE RESPONDENTS RESEARCH RESULT CONSUMER CHARACTERISTICS AND BEHAVIOUR TRUST AND COMMITMENT MEAN AND MEDIAN CORRELATION TEST TRUST AND COMMITMENT Consumer Survey Hairdresser Survey Hairdresser Survey Credibility and Benevolence Trust ANALYSIS HAIRDRESSERS AS RELATIONSHIP FACILITATORS MUTUAL LOW TRUST BETWEEN L ORÉAL REDKEN AND E-COMMERCE ACTORS DISPROPORTIONATE TRUST AND COMMITMENT BETWEEN HAIRDRESSERS AND L ORÈAL REDKEN CONCLUSION FURTHER RESEARCH MANAGERIAL IMPLICATIONS REFERENCES APPENDIX 1 SURVEYS... I APPENDIX 2 FACTOR ANALYSIS... IX

4 1. INTRODUCTION Many of our customers are purchasing online instead of in our salon and it feels like L Oréal Redken doesn t really do anything about it, that feels frustrating sometimes. - Hairdresser at Stockholm based Salon, interviewed during pre-study. Modern consumers utilize a variety of channels when gathering information about and purchasing products and understanding and managing these channels of consumption is increasingly becoming an important part of marketing strategy (Ansari et al.,, 2008). This type of hybrid shopping (Kalyanam and Tsay, 2013) which entails opportunistically switching between different channels towards a single purchase, has in turn also has given rise to a related type of consumer behaviour. Consumer utilization of multiple channels of consumption has been argued to result in consumers acquiring information about a product from a particular channel but ultimately purchasing the product/service from a competing channel, often titled showrooming in news media (DeStasio, 2012; Darlington, 2012) and increasingly in academia (Balakrishnan et al., 2013; Mehra et al., 2013). Showrooming has been described as a substantial problem for companies that primarily have relied on retail distribution channels in marketing their products (Darlington, 2012). Professional hair care products is one of the industries where showrooming has led to a shift towards E-commerce, impacting hair salons who traditionally have exclusively sold the products and acted as experts and ambassadors for hair care brands (Gustafsson, 2014). As the trend of showrooming has reached the hair care industry, consequences arise for network actors who traditionally have been crucial elements in marketing activities. Previous research discussing showrooming have often placed the blame with the opportunistic, free-riding behaviour of consumers (Balakrishnan et al., 2013; Van Baal and Dach, 2005; Konuş et al., 2008) and portrayed brick-and-mortar retailers as victims of price wars (Carlton and Chevalier, 2001; Heitz-Spahn, 2013). Significant academic efforts have also gone into discussing issues of pricing and price image (Hamilton and Chernev, 2013) in connection with retailers struggle to remain competitive from a functional value standpoint in the wake of multichannel consumption (Mehra et al., 2013; Kalyanam and Tsay, 2013). Media and trade-magazines have gone even further, adopting a managerial perspective and discussing showrooming with the purpose of resolving the issue through altering consumer behaviour and thus minimizing free-riding (Aspator, 2013; Myron, 2013; Web, 2012). While previous research has extensively researched consumers as the central actor and villain, the 2

5 actions and relationships between other actors in the surrounding network have often been overlooked. As the authors of this thesis initially set out to study the phenomenon of showrooming from the viewpoint of L Oréal Redken in Sweden, we were surprised to immediately encounter strong indications that the problem may very well be of a different nature. In conducting a pre-study about showrooming in the hair care industry it was unexpected to uncover what appeared to be relational difficulties in existing relationships between hairdressers and L Oréal Redken. Our initial conducted pre-study consisting of interviews with key actors in the supplier-buyer-customer network revealed deeply discrepant views of existing relationships. This early finding suggested that there is more to the phenomenon of showrooming than simply acknowledging the free-riding behaviour of consumers. Our pre-study confirmed showrooming as phenomenon of importance to both hairdressers and L Oréal Redken and also revealed underlying trust and commitment issues. These results further highlighted the importance of mapping this particular relationship and investigating how varying degrees of trust and commitment affect relationships between key actors in the business network. The effects of trust and commitment in relationships (Morgan and Hunt, 1994; Anderson and Narus, 1990), on store loyalty (Macintosh and Lockshin, 1997; Foster and Cadogan, 2000) and on consumer online purchasing (Pavlou and Chellappa, 2001; Jarvenpaa and Tractinsky, 1999) have been widely discussed, however trust and commitment have rarely been applied in researching the relationships between actors in a network characterized by showrooming. The results of the pre-study allowed us to focus our research specifically on the relationship between hairdressers and consumers. Focusing on this particular relationship enabled the authors to pursue a dyadic research method, measuring trust and commitment from both hairdresser and consumer perspectives. The methodological approach of this study thus improves upon a majority of empirical investigations in previous research which often have limited their studies on only one side of the relationship (Terpend et al., 2008). Examining both actors allowed for in-depth analysis of the exchanges and a more nuanced discussion of how the actors interrelate. This paper consequently seeks to understand how trust and commitment between consumers and hairdressers affect other actors in their surrounding network, ultimately setting the setting the stage for showrooming to occur. This presents us with an opportunity to deepen the understanding of showrooming in the direction of relational exchanges of trust and commitment. 3

6 1.1 RESEARCH QUESTION Consequently, the following research question was chosen: How do trust and commitment between end consumers and hairdressers affect relationships with the overarching brand of L Oréal Redken and e-commerce actors respectively? 4

7 2. THEORETICAL FRAMEWORK 2.1 BUSINESS NETWORK THEORY Business networks and the nature of relationships between actors have been and continue to constitute a critical area of research within marketing theory and practice (Brennan and Turnbull, 1999; Morgan and Hunt, 1994). Business networks can be defined as a set of two or more connected business relationships, in which each exchange relation is between business firms that are conceptualized as collective actors (Håkansson and Johanson, 1994, p. 2). Repeated and enduring exchange relationships between the actors has also been described as a key characteristic of networks (Podolny and Page, 1998, p. 4). 2.2 THEORY OF COMMITMENT AND TRUST One of the most influential studies in the field of business network models is the commitment and trust theory of relationship marketing, first constituted by Morgan and Hunt (1994). In their study Morgan and Hunt (1994) stress the importance of not only being an effective competitor in the business environment, but also being an effective co-operator thus commitment and trust must be present from both buyers and suppliers. The authors identify commitment and trust as the two main drivers behind companies being able to sustain productive, healthy and effective business relationships (Morgan and Hunt, 1994). Anderson and Narus (1990) also agree upon this statement and claim that A key theme, and an underlying premise of social exchange theory, is the importance of trust and commitment in ensuring relationship effectiveness. An important discussion in the business network theory on commitment and trust according to Ambrose et al., (2009) is the different perceptions of the concepts between buyers and suppliers. Given that the two partners have different interests and different needs in the relationship, it is reasonable to assume that they respond to different cues within the relationship. When asked about satisfaction with the relationship, suppliers typically rate the relationship higher than buyers (Ambrose et al., 2009). However, in an electronic data interchange implementation study, buyers were found to have greater expectations than suppliers in the relationships (Wilson and Vlosky, 1998). Comparing the buyers and suppliers perceptions of relationship characteristics, Ambrose et al., (2009) found that for commitment there are significant differences in the perception of this 5

8 characteristic in the relationship between buyers and suppliers. On the other hand Ambrose et al., (2009) found that the two parties perceive trust very similarly. 2.3 TRUST Trust in Business to Business Relationships Morgan and Hunt (1994, p. 23) define trust as: it exists when one party has confidence in an exchange partner's reliability and integrity. Uzzi (1997, p. 9) also emphasizes the importance of trust in a business network: trust is also the main way to govern the other part, not using traditional ways such as calculative risk and monitoring systems. However it is the definition of trust by Moorman et al., (1993, p. 315) that has served as the main definition through relationship marketing the past decade and will also constitute the framework for trust in business relationships in this thesis; trust is the willingness to rely on an exchange partner in whom one has confidence. An important aspect of the definition by Moorman et al., (1993) is the notion of trust as a belief, a sentiment, or an expectation about an exchange partner that results from the partner's expertise, reliability, and intentionality Benevolence and Credibility Trust The definition of trust by Moorman et al., (1993) reflects two distinct components: (1) credibility, which is based on the extent to which the retailer/vendor believes that the vendor/retailer has the required expertise to perform the job effectively and reliably. (2) Benevolence, which is based on the extent to which the retailer/vendor believes that the vendor/retailer has intentions and motives beneficial to the retailer when new conditions arise. Trust based on a partner's expertise and reliability focuses on the objective credibility of an exchange partner: an expectancy held by an individual that the partner's word or written statement can be relied on (Lindskold, 1978). Benevolence focuses on the motives and intentions of the exchange partner. This dimension includes the qualities, intentions, and characteristics attributed to the partner rather than its specific behaviours vendors/retailers who are concerned with the outcomes of a retailer/vendors along with their own will be trusted to a greater extent than vendors who are only interested in their own welfare. Benevolence trust can exist even when credibility trust of vendors is less than perfect: Vendors may not act the way they say they will because of competing demands or situations beyond their control. In other words, vendors will be trusted if their actions are perceived as benevolent by the retailer (Ganesan, 1994). 6

9 According to Ganesan (1994) trust is the most important pillar to create a relationship with a long-term perspective. A retailer's long-term orientation is the perception of interdependence of outcomes in which both a vendor's outcomes and joint outcomes are expected to benefit the retailer in the long run (Lindskold, 1978). Retailers with a short-term orientation are concerned only with the options and outcomes of the current period, whereas retailers with a long-term orientation focus on achieving future goals and are concerned with both current and future outcomes (Moorman et al., 1992). With trust the focus is on future conditions and trust is also necessary for the perception of a fair division of resources. Credibility and benevolence will have similar effects on long-term orientation because both specific trusting behaviour and intentions are required to mitigate the perception of risk due to opportunistic behaviour (Ganesan, 1994). The hazards of opportunistic behaviour in long-term relationships can be mitigated or removed if there is trust between the two parties. Thus, when trust exists, retailers and vendors believe that long-term idiosyncratic investments can be made with limited risk because both parties will refrain from using their power to renege on contracts or use a shift in circumstances to obtain profits in their favour (Anderson and Weitz, 1992). Furthermore, trusting relationships are likely to have lower transaction costs because incomplete contracts are sufficient for running the exchange relationship (Ganesan, 1994). Scanzoni (1979) and Dwyer, et al., (1987) argue that as the experience with the vendor increases, the dyad is more likely to have passed through critical periods in the relationship. Such periods provide both parties with a greater understanding of each other and their idiosyncrasies. Thus, experience with the vendor is likely to increase a retailer's trust in the vendor's credibility and benevolence Trust in Business to Consumer Relationships Trust has long been considered a governing force in consumer behaviour (Schurr and Ozanne 1985). Jarvenpaa and Tractinsky (1999) make it clear that in order for trust to exist in relationships between consumers and businesses, the seller must be able to and actively strive to deliver the quality of goods and services that is expected. Traditional business-to-business academia has proposed that frequent face-to-face contact; contractual agreements and dedication of resources are what builds trust and commitment (Doney and Cannon, 1997). However, Jarvenpaa and Tractinsky (1999) argue that these type of trust-building mechanisms are not always directly applicable to the consumer-firm interaction. Instead, as in the case of internet retailers, consumer trust can rather be conceptualized as the trust in the seller organization. When lacking salespersons or other forms of personal interaction, consumers 7

10 revert to rules-of-thumb such as size and reputation (Jarvenpaa and Tractinsky, 1999) and focus more on the performance of the product/service (Garbarino and Johnson, 1999). The authors also argue that internet retailers might be challenged by this since switching costs are very low, should a consumer s experience not be satisfactory. Risk has also been argued to constitute a modifier of consumer trust since some consumer experiences require more trust, such as the process of providing your bank information to an electronic retailer (Anderson and Srinivasan, 2003). Trust in a consumer context is also connected with loyalty, where repeated experiences of performance from a product leads to increased trust which in turn further increases loyalty to the product and the overarching brand (Jarvenpaa and Tractinsky, 1999). 2.4 COMMITMENT Commitment in Business to Business Relationships Commitment can be defined as an exchange partner believing that an on-going relationship with another is so important as to warrant maximum efforts at maintaining it (Morgan and Hunt, 1994, p. 23). Many studies prove that a long-term orientation enhance the effectiveness of the buyer-seller relationship. Anderson and Weitz (1992) refer to such long-term orientation in a relationship as commitment and indicate that mutual commitment result in independent channel members working together to serve customer needs better and increase mutual benefits. As explained above commitment and trust in symbiosis enhances focus on long-term solutions with existing partners and increases the willingness to commit to potentially high-risk actions, as they trust that their partners will not be opportunistic. Dimensions of trust and commitment have been shown to play an important role in high-value strategic relationships, where specific investments are high, and contractual governance alone is not adequate (Morgan and Hunt, 1994). In such relationships, it is important that both parties perceive that they are gaining value from the relationship if it is to continue and the relationship is to be considered a success (Narayandas and Rangan, 2004). There is also an interrelationship between trust and commitment. Morgan and Hunt (1994) and Ganesan (1994) claim that trust influences commitment while commitment does not influence trust. This means that even though commitment can be apparent in a relationship there can be an absence of trust Commitment in Business to Consumer Relationships As marketing scholars have moved away from the transactional view of exchange and instead adopted a relational view, commitment has become a central aspect of study, an observation that is equally true for research in consumer relationships and inter-organisational studies 8

11 (Gundlach, et al., 1995). Commitment has been defined as "an implicit or explicit pledge of relational continuity between exchange partners" (Dwyer et al., 1987, p. 19). While commitments equal in strength serve as to deepen the relationship, disproportionate commitments can cause instability and leave one of the parties open to opportunistic behaviour (Gundlach, et al., 1995). It also entails a willingness to accept short-term sacrifices in order to enable long-term benefits (Dwyer et al., 1987). Commitment has also been argued to be a pre-condition to the forming of social norms, acting as governance and regulating mechanism for limiting opportunism in relationships (Macneil, 1980). Commitment is fundamentally about a willingness to invest in assets specific to an exchange, demonstrating future reliability in exchanges (Anderson and Weitz, 1992). Often connected to loyalty, consumer loyalty to brands and organizations can be argued to represent a form of commitment. As discussed earlier, the situation in which the exchange occurs affects the levels of trust and commitment experienced by the consumer (Corbitt et al., 2003). Previous research has often used models from organizational theory to assess levels of commitment in consumers, particularly employees commitment to an organization. Consequently, personal identification with the organization, psychological attachment, concern for the future welfare of the organization, and loyalty can be considered central aspects of the concept of commitment in a consumer context (Garbarino and Johnson, 1999). 2.5 SUMMARY OF THEORETICAL FRAMEWORK The theoretical framework of this paper originally stems from business network theory, recognized as a critical area of research within marketing theory and practice (Brennan and Turnbull, 1999; Morgan and Hunt, 1994). This paper adopts commitment and trust theory of relationship marketing, first constituted by Morgan and Hunt (1994), as a theoretical construct used in this paper. Trust is characterized as existing when one party has confidence in an exchange partner's reliability and integrity (Morgan and Hunt, 1994, p. 23). The established credibility and benevolence components of trust presented by Moorman et al., (1993) are also used to provide further perspectives on trust. Theoretical perspectives on trust in a business to consumer context are presented using the findings of Garbarino and Johnson (1999) and Jarvenpaa and Tractinsky (1999). Commitment is conceptualized from the theoretical contributions of Morgan and Hunt (1994), Anderson and Weitz (1992), Dwyer et al., (1987) and Ganesan (1994), recognizing commitment as "an implicit or explicit pledge of relational continuity between exchange partners" (Dwyer et al., 1987, p. 19). Commitment also entails a 9

12 willingness to invest in assets specific to an exchange, demonstrating future reliability in exchanges (Anderson and Weitz, 1992). Lastly, this paper recognizes the interrelationship between trust and commitment, adopting the view that trust influences commitment while commitment does not influence trust as shown by Morgan and Hunt (1994) and Ganesan (1994). 10

13 4. METHOD The method is divided into three sections. Firstly the conducted pre-study will be presented leading in to a description of the actors in the researched business network. This part will mainly serve as background information to get an understanding of the roll-out of the conducted surveys. Secondly the data collection, research design and factor analysis explaining how trust and commitment have been measured will be examined. Thirdly and lastly the outcome of the surveys will be presented. 4.1 PRE-STUDY A pre-study consisting of six semi-constructed interviews with hairdressers and L Oréal Redken employees was carried out to further determine the scope of the study, which relationships warranted further investigation as well as which variables to be studied. The questions for the pre-study interview were derived from interview questions in Singley and Williams (1995) study on reliability and commitment in the area of consumer behaviour. This theory was chosen in the belief that the aim for the study was to be the showrooming phenomena from a consumer perspective. The pre-study interviews was recorded and later transcribed. When analysing the results from the pre-study interviews it became clear that it is not consumer behaviour in the light of showrooming that is the underlying issue in the business network. Instead the interviews indicated that there is not only a lack of commitment from the consumers side towards the hairdressers since they turn to e-commerce actors but also that there is unbalance in the relationship between hairdressers and L Oréal Redken. When interviewing L Oréal Redken it became obvious that they appear to have somewhat unstable relationships with both hairdressers as well as e-commerce actors. The pre-study indicated that commitment was an issue in the relationships between the actors since they all seemed to focus on their own individual agenda and not share any goals or future outlooks. Further it was also found that trust was lacking in the relationships since both the hairdressers and L Oréal Redken employees claimed that the other party sometimes do not keep their promises and that misunderstandings often occur between the actors regarding responsibilities. It was then determined that trust and commitment are the most relevant relationship characteristics to be further investigated. Trust and commitment theory of relationship marketing has been extensively studied and is recognized as one of most influential theoretical frameworks in business network theory 11

14 (Morgan and Hunt, 1994; Anderson and Narus, 1990). Trust and commitment theory was also chosen since the objective of this paper is to study essential relationship characteristics in both business to business networks and business to consumer networks. Since the main aim is to study the dyadic relationship between consumers and hairdressers it is of great importance that the characteristics can be measured in both directions. The pre-study also enabled the authors to determine the main actors that constitute the business network and how they are connected to each other. 4.2 ACTORS IN THE STUDIED BUSINESS NETWORK Four actors were identified in the studied business network as a result of the pre-study, shown in Figure 1 as L Oréal Redken, hairdressers, authorized E-commerce and consumers. Interviews with key employees at L Oréal as well as hairdressers highlighted these four actors as the major actors of importance in the network. Levels of trust and commitment will be assessed in the relationships between said actors, illustrated by arrows in Figure 1. The arrows illustrate exchange of the relationship characteristics trust (T) and commitment (C), and it is also these characteristics that were measured in the relationships. Trust and commitment was measured both ways in all relationships. To exemplify: in the case of consumers trust and commitment was measured towards hairdressers, L Oréal Redken and E-commerce. The arrow between L Oréal Redken and consumers is striped since the relationship is indirect; Redken products are sold to consumers via hairdressers and E-commerce meaning that they do not have a direct connection. Figure 1, Business network map of the actors hairdressers, consumers, authorized E-commerce and L Oréal Redken 12

15 4.2.1 An Introduction to L Oréal Redken L Oréal Group is the largest cosmetic and skincare corporate group in the world, with sales of billion US dollars of May 2013 (Forbes, 2014). With over twenty brands in all price segments L Oréal Group is the cosmetic and skincare market leader in several countries. L Oréal Sweden had a market share of 26 % in 2012 (Euromonitor, 2013). The company is separated into four product divisions depending on which market the brands belong to. In the Professional Products Division (PPD) brands are specialized in professional products, meaning products that are only sold in hair salons and authorized online stores (Gustafsson, 2014). Redken, launched in 2000 in Sweden, is one of the four PPD brands which L Oréal markets and is focused on hair care and hair styling products. L Oréal Redken Sweden AB in 2013 had a sales of 9.04 million US dollars, with a total of over hair care products sold in Hair care accounted for 44 % of turnover, representing the largest business area. Fashion, science and innovation are the brand values of Redken and the brand is well-known as a professional, high-end brand among Swedish consumers and hairdressers (Redken, 2014) Hairdressers and Hair Salons in Sweden There were registered hairdressers and 8500 hair salons as of May 2013 in Sweden, with a combined turnover of 10 billion SEK. Consumers on average spend 700 SEK per visit (L Oréal Press release, 2013). As of April 2014 there were 305 registered Redken salons in Sweden which act as retailers of Redken products (L Oréal Redken Data 1) E-commerce Actors Selling Redken Products E-commerce has emerged as a growing source of sales of L Oréal Redken products. While E- commerce only accounted for 1.45 % of Redken s turnover in 2011, in 2012 it was 5.77 % and in 2013 it had grown further to represent 8 % of total Redken turnover. Two E-commerce actors dominate the authorized sales of Redken with 98 % of market share, both surveyed in this study (L Oréal Redken Data 2) Hair Care Consumers in Sweden A report from 2012 on Swedish E-commerce revealed that 22 % of Swedish consumers bought hygiene and beauty products online during that year. Convenience and accessibility were stated as the consumers most important factors in favor of e-commerce (Bring E- handelsrapport 2012). The premium segment of consumers has decreased from 29.5 % of the market in 2007 to 25.3 % of the market in 2012, while the mass market grew from 70.5 % to 13

16 74.7 % of the Swedish hair care market (Euromonitor, 2013). The mass-market segment is also expected to grow by 1.9 % by 2017, with the premium segment expected to comparatively loose market share in equal proportion (Euromonitor, 2013). The share of consumers buying their hair care products in salons has decreased in the period , with salons constituting 23.3 % retail value sales in Internet sales constituted 2 % of total sales in 2012, a small increase from 1.3 % in 2007 (Euromonitor, 2013). 4.3 RESEARCH DESIGN In our review of literature, empirical survey-based studies of relationships have tended to concentrate their studies on only one partner in the relationship. In a review of 151 articles on empirical studies of buyer-supplier relationships over 20 years, Terpend et al., (2008) found that only six studies gathered data on both buyers and suppliers. Authors typically quote cost or time constraints as the reason for selecting either the buyer or the supplier as the unit of analysis (Mohr and Spekman, 1994). In our review of literature no previous study was found that adopts a two-way, dyadic, empirical investigation in researching the exchanges of trust and commitment between seller/retailer and end consumer. The sampling of hairdressers and end-consumers allowed the empirical investigation to target actors that are proven to have existing relations, as will be further explained in the section concerning sampling. A dyadic, cross-sectional approach to studying trust and commitment flows in both directions of a relationship allows for a more in-depth analysis of the nature of the relationships and a richer discussion of how the actors interrelate. Consequently, the research design of this study also presents a methodological contribution, adding to and expanding the available approaches to study network flows of trust and commitment. This study primarily focuses on studying trust and commitment in the relationship between the actors consumers and hairdressers. However, trust and commitment in the relationships with and between the other actors of E-commerce and L Oréal Redken will also be studied to assess to what extent they affect or are affected by the dyadic tie between consumers and hairdressers. Quantitative surveys targeted at each network actor will be used to assess said relationships. The motivations for pursuing a quantitative, survey-based approach to studying the relationships, as well as limitations to this approach are discussed in following sections. The theoretical concept of commitment and trust, chiefly proponed by Morgan and Hunt (1994) and will be used as a theoretical construct to assess the nature and characteristics of 14

17 said relationships. To widen the concept of the relationship characteristica trust theoretical standpoints from Ganesan (1994) is also used together with the conceptualization from Morgan and Hunt (1994). Due to Morgan and Hunt (1994) and Ganesan (1994) primarily adopting a business-to-business view of trust and commitment, additional academic articles, including Anderson and Srinivasan (2003) Garbarino and Johnson (1999) and Corbitt, et al., (2003), have also been used to enable measuring of trust and commitment in suppliercustomer relationships. The surveys targeted at consumers thus feature questions to assess the levels of trust and commitment towards hairdressers, E-commerce and L Oréal Redken respectively. Likewise, surveys targeted at hairdressers will feature questions to assess trust and commitment in relationships with consumers as well as L Oréal Redken. E-commerce actors will be surveyed with regards to their relationships with consumers and L Oréal Redken. Lastly, L Oréal Redken will be surveyed to discover trust and commitment flows with hairdressers, customers and E-commerce. Further elaboration on the use of survey questions follows in subsequent sections. 4.4 MEASURING TRUST AND COMMITMENT In describing their methodological approach, Garbarino and Johnson (1999, p. 76) state that: most of the existing measures of trust and commitment within the relational context focus on specific business-to-business situations and therefore are not directly generalizable to the consumer context. The authors continue by giving examples of the few studies done that constitute exceptions to this, and describe how the measures used often are highly contextspecific and uniquely developed to fit the ends of those particular studies (Garbarino and Johnson, 1999). While survey structure and questions are based upon previously used surveys, the questions have been adapted to better match the given situation and relationship as has been the custom in previous research assessing trust and commitment in a variety of industries and situations. Survey questions were translated to the respondents first language, Swedish, and then translated back to English again to ensure a functionally equivalent translation, in accordance with the well-established methodological translation practices of Brislin (1970). 15

18 4.5 MEASUREMENT INSTRUMENTS Four different surveys (consumers, hairdressers, E-commerce and L Oréal Redken) were developed in order to measure trust and commitment in the relationships between the actors. All surveys followed a framework drawn from academic articles, from which article the questions are derived is shown in Figure 2. However the questions of the different surveys have been somewhat modified in order for the respondent to easier relate to and understand the different questions. The questions were pre-tested by 30 persons in order to make sure that wordings and expressions were easy to follow. All questions in the four surveys, except the background questions, were answered with a seven graded likert scale, were 1 meant strongly disagree and 7 meant strongly agree. The same likert scale is used throughout all surveys to minimize misunderstandings that can lead to biased results. Below a more detailed explanation of the construct of the four different surveys follows. The background questions for each survey maps facts about the respondent such as age and gender. For the consumer survey behavioral questions is also asked about shopping habits and salon visits. The questionnaires in their full length can be found in Appendix 1. All four surveys consist of different sections where trust and commitment are measured between the actors. The questions for the different sections are aimed directly towards the actor the section is targeted for. As shown in Figure 2, there are several questions measuring the factors trust and commitment for each actor and section of the survey. For example the consumer survey consist of four questions measuring trust towards L Oréal Redken (T1-T4) and four questions are measuring commitment towards L Oréal Redken (C1-C4). The business to business relationships between L Oréal, hairdressers and E-commerce are also measuring trust in two dimensions in accordance with Ganesans (1994) theory; benevolence and credibility trust. 16

19 17

20 Figure 2, Operationalization table consumer survey, hairdresser survey, L Oréal Redken survey and E-commerce survey including theoretical frameworks and survey questions. 4.6 SAMPLING Hairdressers were sampled with the goal of reaching a large number of hair salons that are established retailers of L Oréal Redken products. Data from L Oréal Redken Sweden enabled sending online questionnaires to 305 Swedish hairdressers whom as of April 2014 were all retailers of L Oréal Redken products; hence these 305 hairdressers constitute the population for the hairdresser survey. The questionnaire was sent via directly to the hairdressers to further ensure that only respondents who have experience of dealing with L Oréal Redken and consumers answered the survey. The consumer survey was administered electronically to followers of L Oréal Redken s official Facebook fan page, through access granted by L Oréal Redken Sweden. The survey reached 5630 consumers who also constitute the population for the consumer survey. There was a potential biasing effect of distributing the survey via L Oréal Redken Facebook fan page since the followers of the page may already have a positive attitude to the brand and therefore do not represent an average consumer. However since the aim of this study was to analyse how consumers who actually have a relationship with hairdressers and E-commerce actors selling Redken products and to the Redken brand, the Facebook followers can be considered appropriate for this survey. This method was also chosen in the interest of enabling trust and commitment to be measured at sufficient scale with a large number of responses. Potential biasing effects in sampling were also mitigated by adopting pre-tested 18

21 survey questions as well as posing questions in reverse-negative form, allowing for exclusion of outlier responses that display clear lack of consistency. E-commerce actors were sampled based on size and importance for L Oréal Redken Sweden, using gross sales and pre-study results to determine size and importance, ensuring that E- commerce actors with substantial ties to L Oréal Redken were the targets of surveys. Two of the largest E-commerce retailers were chosen for the investigation and the survey were sent by to relevant employees of the two actors, such as purchasers, customer service personnel, managers and CFOs. The population for the E-commerce actors was 55 people and the survey was ed to all of them. Lastly, the survey aimed at L Oréal Redken was distributed to managers and sales representatives with first-hand experience of collaborating with hairdressers and E-commerce actors. The population for the L Oréal Redken survey was the 17 employees in the team. 4.7 SURVEY OUTCOME The consumer survey was available on L Oréal Redken's Facebook fan page during five days. After one sent out reminder the final outcome was 529 respondents. This represented a response rate of nearly 10 %, which is a relatively high figure for a social media platform, such as Facebook (Baruch and Holtom, 2008). Since the main aim of this research is to study the relationship between the consumers and hairdressers, only the consumers claiming that they usually visit a hairdresser selling Redken products was further analysed. Hence, 303 respondents in the consumer survey were included in the analysis. As explained above the three different surveys designed for hairdressers, L Oréal Redken and E-commerce were sent out via and with the exhortation to reply the survey within one week, after five days a reminder was sent out. Of the 305 sent out surveys to hairdressers 101 were replied (response rate of 33 %). 17 surveys were sent to the L Oréal Redken team and 15 surveys were replied (88 % response rate). Finally, 35 of the 55 surveys sent out to E- commerce actors were replied (64 % response rate), with a distribution of 60 % for one actor and 40 % for the other one. 19

22 4.8 FACTOR ANALYSIS After conducting the survey a factor analysis was carried out in order to ensure that there was divergence between the factors trust and commitment before further analysis was made. The factor analysis was carried out solely on the hairdresser survey (N = 101) and consumer survey (N=303) since these two constitute the main point of analysis for this thesis. It was also only for these two surveys that the sample was large enough to produce significant factor analysis. According to Pallant (2008, p. 48) there must be approximately 100 respondents in order to conduct a valid factor analysis. Thereby only the construct for trust and commitment between the consumers and hairdressers was investigated. For the consumer survey only the respondents who claim that they visit salons who sell Redken products were analysed since they are the only ones relevant to examine the dyadic relationship between hairdressers selling L Oréal Redken and consumers mentioned above. The factors were analysed in three steps: (1) Kaiser-Meyer-Olkin Measurement of Sampling Adequacy (KMO) and the Bartlett's test of sphericity. Both surveys showed a KMO result above 0.7 that can be considered a good result (Pallant, 2010, p ). And both surveys showed a significant Bartlett's test (p=. 000). The correlation matrix showed many correlation coefficients above 0.3. (2) By using Kaiser s criterion components that had an eigenvalue above 1 or more were examined (Pallant, 2010, p ). In both surveys two components acquire this criterion, which meets the requirements for the trust and commitment structure for the survey. The extracted sum of squared loading show that in the consumer survey 83 % of the variance can be explained by the two components, and 75 % respectively for the hairdresser survey. (3) Lastly the rotated component matrix, which shows the convergence between the components, was examined. In the first round of the test all items/questions in the survey was measured, however cross loading of some items was found which were then extracted and the components tested again until no cross loading was found. The factor analysis in its full length can be found in Appendix 2. For the hairdresser survey item/question T3 and T4 (hairdressers - consumers) was crossloading and therefore removed in the continuation of the analysis. For the consumer survey item/question T3 and T4 as well as C2, C3 and C4 (consumers- hairdressers) was crossloading and therefore removed. Below the rotated component matrixes for the two surveys is shown after the above variables are removed. The two matrixes show no cross loading on the components. The questions in their full length can be found in Figure 2. 20

23 Figure 3, Rotated Component Matrix, hairdresser survey Figure 4, Rotated Component Matrix, consumer survey 4.9 QUANTITATIVE CONSIDERATIONS Quantitative, self-administered questionnaires consisting of multi-item questions have been described as the dominant method for assessing trust in the organizational sciences (Lyon et al., 2012, p. 177). Confidential survey questions are used since this method enables the capture of individuals sensitive perceptions and opinions that would otherwise most likely remain undisclosed during face-to-face interviews (Lyon et al., 2012; Bryman and Bell, 2011). Given that questions about trust and commitment very well could be of sensitive nature to some respondents, anonymous self-administered questionnaires offered increased discretion. This reason also strongly contributed towards the decision to use surveys in the case of E-commerce and L Oréal Redken actors as well. While interviews may have provided more in-depth, expanded answers, lacking confidentiality and uniformity would have risked skewing results to unacceptable levels. The wide geographical spread as well as sheer number of respondents in the hairdressers category also favored the self-administered questionnaire over interviews. A quantitative, survey-based method also enabled this study to draw inspiration from existing, well-documented quantitative methods to ensure validity in measurement. Consequently, all questions originate and are adapted from existing questionnaires used in academic articles studying trust and commitment in relationships (Anderson and Srinivasan, 2003; Garbarino and Johnson, 1999; Corbitt, et al., 2003; Ganesan, 1994; Morgan and Hunt, 1994). 21

24 Self-administered questionnaires are often criticized as a method due to limitations in flexibility, thus several methodological tactics were employed to minimize the impact of these limitations. While questionnaires cannot probe for elaborate answers, our review of earlier research revealed that attaining elaborate answers was not necessarily a requirement in studying the relational characteristics; trust and commitment. Instead, as stated earlier, quantitative survey-based approaches have been argued to be the established norm in researching trust within organizational sciences (Lyon et al., 2012). Other often cited limitations with self-administered questionnaires include respondents not fully understanding or misinterpreting questions (Bryman and Bell, 2011, p ). In order to minimize this limitation, questionnaires were pre-tested as explained in the measurement instrument section above PEARSON CORRELATION AND CALCULATING MEANS The result of the surveys was analysed in two ways and in two different dimensions. The main focus for the analysis will be on the dyadic relationship between the hairdressers and the consumers but an analysis of the other relationships in the business network also took place in order to add different perspectives of the case and also to find out how the different relationships affect each other. 1. The first part of the analysis consisted Pearson correlation tests for the hairdresser and consumer survey. The items for trust and commitment were grouped to the two variables and thereafter correlation was performed for the variables trust and commitment. Pearson correlation coefficient is measuring the strength and direction of the linear relationship between two variables that is defined as the covariance of the variables divided by the product of their standard deviations (Pallant, 2010, p. 101). The strength of a relationship is given a value between 1 and -1.0 means no relationship at all, 1 means a positive relationship and -1 means a negative relationship. When the P-value for the correlation test is below 0.05 the result is significant. Values between 0.0 to 0.4 can be considered as weak, low correlation. Values between 0.4 to 0.7 can be considered as moderate correlation. 0.7 to 1.0 can be considered as strong, high correlation (Dahmström, 2011, p. 232). The Pearson correlation tests was made in order to decide the strength of the connections between the factors trust and commitment within the relationships between hairdressers and consumers. Correlation was also made for relevant background variables such as shopping behaviour and trust and 22

25 commitment. Further correlation was made for the two different types of trust (credibility trust and benevolence) in the business-to-business relationship from the hairdressers point of view towards L Oréal Redken and E-commerce. In Figure 5 the general construct for the survey is presented showing the trust and commitment variables and the items consisting of different survey questions. Correlation test was not made for the other two surveys (L Oréal Redken and E-commerce) due to the low sample size and the fact that it is the consumerhairdresser relationship that constitute the main point of analysis for the surveys hence correlation for L Oréal Redken and E-Commerce could be considered irrelevant in this aspect. 2. In order to compare the different relationships, means and medians for the trust and commitment factors were used. This method was also chosen because statistical tests is irrelevant due to it being impossible to pair the respondents for the different surveys. The means and medians were calculated from the 7-graded likert scale used in the surveys, meaning that the lowest value was 1 and the highest value 7. Median was used as a complement to mean since median can reflect a higher or lower value depending on the frequency of the same values. From the mean and the median analysis it can be calculated how high/low the different actors in the business network value each other in terms of trust and commitment. Figure 5, General illustration depicting survey construct of factors and items 23

26 4.11 ABOUT THE RESPONDENTS 91.3 % of the hairdressers answering the survey were women and as shown in Figure 6 the largest age category represented was (42 %). As shown in Figure 7 the majority of the consumer respondents were in the age category (31 %) and 93 % of the respondents were women. Figure 6, age distribution hairdressers Figure 7, age distribution consumers 24

27 5. RESEARCH RESULT In the result section the relevant research result from the four conducted surveys (hairdressers, consumers, E-commerce and L Oréal Redken) will be displayed. Main focus will be put on the hairdresser and the consumer survey since they constitute the main focal relationship in this study. 5.1 CONSUMER CHARACTERISTICS AND BEHAVIOUR As shown in Figure 8, the majority of the consumers state that they buy their haircare products in hair salons (chosen 156 times). The second most frequent purchase location was online (chosen 135 times). Note that the respondents were able to choose several options for this question. The majority of the consumers purchase professional haircare products, 81 % (Figure 9). Where do you usually buy haircare products? Others Drugstore Grocery store Department store Online Hair salon Hair salon Online Department store Grocery store Drugstore Others Figure 8, distribution point of purchase of hair care products consumers Figure 9, distribution of consumers buying professional hair care products 25

28 As per Figure 10, 74 % of the consumers claim that they have bought hair care products online. Figure 11 shows that 73 % of the consumers answer that the online purchases of haircare constitute 20 % of their total haircare purchases. 81 % of the respondents answered that when they purchase hair care products online they usually spend SEK each time. From the respondents that have purchased haircare products online, 82 % claim that they usually purchase their haircare products from the two websites (E-commerce actors) that are customers of L Oréal Redken. Figure 10, distribution of consumers buying hair care products online more than 70 percent more than 50 percent more than 20 percent less than 20 percent 0% 10% 20% 30% 40% 50% 60% 70% 80% Figure 11, Allocation of purchase occasions online 26

29 Further, 97 % of the consumers claim that they recognize the brand Redken and 91 % state that they have used a Redken product. 58 % of the respondents state that the salon they usually visit sell Redken products. Figure 12 shows that the majority of the respondents bought their last Redken product in a hair salon, 36 %. 32 % state that they bought their last Redken product online. Department store Don t know Online Hairsalon 0% 5% 10% 15% 20% 25% 30% 35% 40% Figure 12, point of purchase of last Redken product 5.2 TRUST AND COMMITMENT MEAN AND MEDIAN Figure 13, shows the means and medians for trust and commitment in all the studied relationships. The consumer - hairdresser relationship trust has a mean of 5.76 and a median of 7. The actor scoring the other actors highest was consumers and the actor scoring the other actors lowest was E-commerce. The highest commitment score was given to L Oreál Redken from consumers, the same applies to trust. In general commitment scored higher than trust in all relationships. The relationships between Redken and E-commerce scored the lowest trust means and medians both ways. There was little to no difference between the scoring of benevolence and credibility trust. The biggest difference was in the Redken - E-commerce relationship where Redken scored E-commerce slightly higher on credibility trust (3.9) than benevolence trust (3.5). 27

30 Figure 13, Means and median trust and commitment all surveys. Maximum possible mean/median: 7, minimum: CORRELATION TEST TRUST AND COMMITMENT The correlation test for the consumer survey and the hairdresser survey resulted in the following statistically significant (at the 0.01 level) findings: Consumer Survey Figure 14 shows the correlation matrix for the consumer survey regarding the trust and commitment variables for all the relationships. For the relationship with the hairdressers there is a moderate positive correlation between trust and commitment (.607). The correlation between trust and commitment for the E-commerce relationship was also moderate, There is no strong significant correlation between the E-commerce trust and commitment variables and the trust and commitment variables for the other actors (L Oréal Redken and hairdressers) 28

31 For the L Oréal Redken relationship the correlation between trust and commitment variables was There was a moderate correlation between the trust variable for L Oréal Redken and the trust variable for hairdressers Figure 14, Correlation trust and commitment consumer survey Figure 15 shows the same correlation matrix as Figure 14, but in Figure 15 two background variables for the consumers are added. The added background variables are if the consumers purchase hair care products at salons and if they usually purchase professional hair care products. However these two variables shows no significant correlation that is strong enough for further discussion. Figure 15, Correlation trust and commitment and background variables consumer survey 29

32 5.3.2 Hairdresser Survey Figure 16 shows the correlation matrix for the hairdresser survey regarding the trust and commitment variables for the relationships with consumers and L Oréal Redken. There was no significant correlation at the 0.01 level between the trust and commitment variables for consumers. However there was a weak positive correlation at the 0.05 level (0.244). There were rather strong correlations between the commitment factor for consumers and the trust factor for L Oréal Redken (0.455). This also applies to the commitment factor for L Oréal Redken that was There was a strong positive correlation between the trust and commitment factors for L Oréal Redken, Figure 16, Correlation trust and commitment salon survey Hairdresser Survey Credibility and Benevolence Trust Figure 17 shows a very strong positive correlation between credibility and benevolence trust for L Oréal Redken, There were also strong positive correlations between the commitment variable for L Oréal Redken and credibility trust (0.777) and benevolence trust (0.796). 30

33 Figure 17, Correlation credibility and benevolence trust and commitment between hairdressers and L Oreál Redken A summary of the results from the mean and median calculation and the correlation test presented is presented in Figure 18. Figure 18, Summary of results from mean and median calculation and correlation tests 31

34 6. ANALYSIS 6.1 HAIRDRESSERS AS RELATIONSHIP FACILITATORS The data analysis showed consumers scoring their relationship with hairdressers as quite high in both trust and commitment; with an average trust score of 5.76 and commitment of 5.35 out a maximum of 7. This emphasizes the hairdressers role as trustable and important in the eyes of consumers. Consumer trust and commitment to E-commerce was lower, particularly in commitment, revealing the tendency of consumers to trust and commit to hairdressers rather than E-commerce. The results of the correlation showed a somewhat strong correlation between and trust and commitment, meaning that consumers who trust hairdressers also tend to commit to their hairdresser. The correlation results also revealed an important finding in that consumers who trust and commit to their hairdresser do not necessarily trust and commit to L Oréal Redken. This suggests that consumers may visit a salon regularly, trust the recommendations of hairdressers and remain loyal to the salon but not automatically or implicitly trust the Redken brand. Taking the argument further, this also implies that a hair care consumer does not visit a salon because it sells Redken products, but rather may buy Redken products because they frequent visit a salon that sell those particular products. This logic from a consumer's standpoint therefore puts emphasis on the hairdressers role as ambassadors and gatekeepers, providing expertise and judgement on products that has value to consumers in itself. This could pose a problem for Redken since their products become somewhat interchangeable and exposed to the willingness of hairdressers to carry their stock. Using the terms of Morgan and Hunt (1994), it is not enough to simply be an effective competitor in the business network, but L Oréal Redken must also act as an effective co-operator, ensuring that Redken remains a competitive product but also making sure that happens through being an effective co-operator. Considering that a consumer was to acquire the valued expertise of a salon, the person could then order the Redken product online, participating in showrooming behaviour irrespective of their relationship with the Redken brand. Analysis of the hairdresser trust and commitment scoring also revealed that hairdressers do not fully trust or commit to their consumers. Combining this finding with the concerns raised by hairdressers in the pre-study, this suggests that hairdressers are indeed aware and concerned about consumers engaging in showrooming behaviour. Applying the research on consumer behaviour in situations with or without 32

35 personal contact by Jarvenpaa and Tractinsky (1999) and Garbarino and Johnson (1999), this would also put a premium on the interaction between hairdressers and consumers from Redken s point of view. Taking Jarvenpaa and Tractinsky s (1999) research into account, when lacking personal contact consumers tend to revert to rules-of-thumb such as perceived size, performance and value for money. Being an exclusive, high priced, complex, premium product mainly sold in premium hair salons, having consumers revert to such basic reasoning is not likely to be in the interest of L Oréal Redken. Consequently, if the personal contact and expertise a hairdresser offers his/her client is not fully present or does not include the Redken brand, consumers are more likely to revert to basic cognitive sorting of products that most likely will not be favourable long-term for the premium Redken brand. However, building consumer trust and commitment to the Redken brand can certainly also be in the interest of hairdressers since this may convince some hesitant consumers to purchase the product at the salon. Again, the hairdressers can, in the scenario most favourable to L Oréal Redken, be considered facilitators and gatekeepers, explaining and conveying the Redken brand, in that way building the foundation to the consumers relationship with the Redken brand. Ruling out strict contractual agreements and other more formal monitoring systems, Uzzi (1997) emphasizes that trust is the main way to govern the other part. Developing increased trust with hairdressers should therefore also be of strategic importance for L Oréal Redken, leading to increased control and influence over their primary partner and sales channel. With hairdressers still contributing the majority of sales, this highlights the importance of hairdressers as a relationship facilitator between consumers and L Oréal Redken - but also between consumers and E-commerce. While hairdressers naturally have no interest in promoting the Redken brand in competing channels of consumption, it could be argued that they still contribute towards this, due to their role as ambassadors of Redken both to consumers who buy products in the salons and consumers who buy their products online. Hairdressers therefore, inadvertently, act in a dual facilitating role, enabling consumers to have relationships with both L Oréal Redken and E-commerce. This further strengthens the view that showrooming is not simply a product of opportunistic consumer behaviour but must be understood as a result of the relationships in the network. Hence, it also follows that if hairdressers were to stop facilitating the initial relationship between consumers and the Redken brand, it is likely that E-commerce actors would also suffer due to a shrinking consumer-base. E-commerce actors may through showrooming have a negative effect on hair 33

36 product sales in salons, but our findings thus suggest that their relationship with consumers in fact is reliant on the very hairdressers they are competing with. 6.2 MUTUAL LOW TRUST BETWEEN L ORÉAL REDKEN AND E-COMMERCE ACTORS The results of the trust and commitment scoring revealed significantly lower scores in trust and commitment means in both directions between L Oréal Redken and E-commerce. L Oréal Redken rated their trust in E-commerce actors at an average of 3.5 out of 7, a low score - especially when compared to L Oréal Redken s trust in consumers and hairdressers, average 5.4 and 4.9 respectively. L Oréal Redken s commitment to E-commerce is again quite low at 4.26, the same tendency is shown here with L Oréal Redken s commitment to both hairdressers and consumers being significantly higher. E-commerce actors with frequent contact with L Oréal Redken officials have cumulatively rated their trust in L Oréal Redken at an average of 3.7 out of 7, and commitment at an average of 3.8. However in their rating of L Oréal Redken there is no obvious difference between benevolence and credibility trust. This finding thus suggests that L Oréal Redken employees that have frequent contact with E-commerce actors share their low trust in the relationship with their E-commerce counterparties. Again, this highlights the mutual low trust discovered between L Oréal Redken and E-commerce actors. If the degree of trust was stronger between the two parties, this would also increase the likelihood of long-term idiosyncratic investments such as shared online platforms that would mutually benefit the parties as well as lower risk of opportunistic behaviour (Anderson and Weitz, 1992). There was also a slight difference in scoring between credibility (3.9) and benevolence trust (3.5) for E-commerce actors. This means that L Oréal Redken trusts E-commerce actors to have the required expertise of the products however consider E-commerce actors to not possess the same intentions and motivations in the same degree. Using the credibility and benevolence theoretical concepts of Ganesan (1994) in analysing this result, this suggests that the credibility component exists in the relationship. The results indicate that expertise and professionalism may exists between Redken and E-commerce, facilitating sales and keeping the relationship alive on a basic, functional level. Even though there are no big differences in the mean scores between credibility and benevolence trust in the relationship there seems to be room for improvement for the benevolence component of trust. In this relationship it can 34

37 be considered problematic that credibility show tendencies to be higher than benevolence trust. The benevolence component of trust is particularly important from L Oréal Redken s point of view since E-commerce actors are important customers and constitutes a large part of the market share for the brand. According to Ganesan (1994) benevolence trust can exist even when the objective credibility of vendors is less than perfect. Considering the shift that has already taken place towards increased E-commerce sales, the tendencies of a lack of the benevolence component and therefore lack of trust and could be alarming for L Oréal Redken. This discovery of relationship dynamics between the actors in the network is particularly noteworthy when considering the shift in hair care product sales towards online E-commerce actors rather than physical salons. As stated earlier, while E-commerce accounted for 1.45 % of Redken s sales in 2011, their share of the market grew to 5.77 % in 2012 and in 2013 had grown further to 8 % of total Redken sales. Consequently, while E-commerce actors have clearly increased in absolute importance due to their sales constituting a larger portion of sales each year, the relationship with Redken lacks signs of mirroring this increase in importance. Additionally, in deepening the analysis of e-commerce actors one must consider the previously stated fact that 98 % of E- commerce sales are contributed by two large actors, constituting 8 % of total Redken sales. When taking this into account it becomes clear that this E-commerce relationship tie differs from the relationship Redken holds with its 305 hairdressers acting as retailers of Redken products. While some of these hairdressers are chains with multiple locations, the fact remains that maintaining relationships with the large number of individual hairdressers constitutes a fundamentally different challenge than managing relationships with two important online retailers. With two actors contributing 98 % of E-commerce sales, the online market for Redken hair care products can not be considered fragmented, strengthening the argument that maintaining and deepening such ties would not be excessively complex or time-consuming for L Oréal Redken to pursue. 35

38 6.3 DISPROPORTIONATE TRUST AND COMMITMENT BETWEEN HAIRDRESSERS AND L ORÈAL REDKEN The statistical data analysis of the relationship between L Oréal Redken and hairdressers revealed disproportions in reported trust and commitment, confirming the pre-study indications that underlying problem existed in the relationship. Employees at L Oréal Redken with frequent contact with hairdressers reported an average trust score of 4.9 and commitment mean of 6 out of a maximum possible score of 7. However there was very small difference in the scores of benevolence (4.3) and credibility trust (4.2). On the other hand, the hairdressers whom L Oréal Redken officials are in contact with reported a similar trust average (4.5) but a lower commitment average (4.7). The mean scoring for benevolence (3.7) and commitment (3.6) trust are also similar in this relationship. The correlation between benevolence and credibility trust shows a almost perfect positive relationship meaning that the hairdressers scoring high on the benevolence items also score high on the credibility items. This means that the hairdressers trust in that L Oréal Redken have the required expertise and professionalism and share the same intentions and motives as the hairdressers equally much (Ganesan, 1994). The correlation between the different types of trust and commitment is also high. The correlation analysis for trust and commitment towards L Oréal Redken from the hairdressers point of view shows a rather strong positive relationship (0.790). Meaning that the hairdressers who scored high or low on the trust items they have also scored high on the commitment items. Consequently, while Redken show tendencies of trusting and willing to commit to hairdressers, hairdressers show signs of not sharing this position of mutual reliance at least for the commitment factor. According to Ambrose et al., (2009) it is not uncommon that business network actors have different perceptions of the relationship. Given that the two partners have different interests and different needs in the relationship, it is reasonable to assume that they respond to different cues within the relationship. L Oréal Redken score hairdressers higher on commitment than the other way around. This indicates that Redken as a supplier feels committed to the hairdressers since they are crucial to their turnover. Also in line with the study by Ambrose et al., (2010) L Oréal Redken (supplier) rates the relationship higher than the hairdressers (buyers), when it comes to trust and commitment. On the other hand, Ganesan (1994) and Lindskold (1978) identify that commitment and trust are the main drivers behind a sustainable and productive relationship between business 36

39 partners. Unbalance between the actors for these drivers can therefore cause instability and leave one of the parties open to opportunistic behaviour, thus indicating that the relationship between hairdressers and L Oréal Redken may risk being disrupted by opportunistic behaviour. The unbalanced relationship confirms the tendencies of deeply discrepant views of existing relationships, which were first encountered in the conducted pre-study. The relatively low scoring on trust and commitment for some of the relationships suggests that the studied network can not be considered static with balanced exchanges, but rather differ in importance and meaning depending on the position and power of the actor in question. According to Morgan and Hunt (1994) and Anderson and Narus (1990) both trust and commitment must be equally present in a business relationship for it to become effective for all parties. Further Ganesan (1994) claim that both credibility and benevolence trust must be included in the relationship. However since there were no difference in the scoring between these for nor the relationship between the hairdressers and Redken neither the relationship between the E- commerce actors and Redken it can be argued that these are equally valued. The characteristics of relationships in the studied network can thus indeed be interpreted in different ways depending on the actor. This further emphasizes the complexity and discrepancy, which often exists in business networks, where actors often are unaware or to a large extent unknowing of the sentiments of other network actors. 37

40 7. CONCLUSION In order to understand showrooming one must also take into account insights about the multiple relationships that constitute the network where showrooming occurs. Where as previous research on showrooming have limited the discussion to the opportunistic behaviour of consumers, this paper instead recognizes the important role of the network, empirically examining all actors with emphasis put on the tie between hairdressers and consumers. The pre-study of hairdressers and L Oréal Redken revealed troubling relations, with a hairdresser quoted as saying Many of our customers are purchasing online instead and it feels like L Oréal Redken doesn t really do anything about it, that feels frustrating sometimes. This prodded the authors to seek a deeper understanding of the trust and commitment issues that seemed to underlie showrooming. Focusing on this particular relationship also enabled the authors to pursue a dyadic research methodology, improving upon previous empirical research of showrooming, which often have limited their studies to only one side of the relationship. Researching a market where business relationships show signs of being strained as a result of showrooming, this paper has applied commitment and trust as theoretical concepts in studying how the relationship between end consumers and hairdressers affect relationships with the overarching brand of L Oréal Redken and E-commerce actors respectively. Analysis of the statistical data highlights the important role of hairdressers as relationship facilitators, enabling consumers to form their own relationship with L Oréal Redken. However, analysis of the correlation also indicated that consumers who have high trust and commitment towards their salon are not necessarily trusting or committed to L Oréal Redken. This relationship dynamic leaves L Oréal Redken somewhat vulnerable to the willingness of hairdressers to act as ambassadors of the Redken brand. The facilitating role of hairdressers, introducing consumers to Redken, may in fact also extend into affecting consumer s relationships with E-commerce, thus also facilitating showrooming. This makes E-commerce indirectly reliant on an existing and healthy relationship between hairdressers and consumers. Showrooming is thus enabled through hairdressers sharing their expertise, acting as ambassadors, inadvertently enabling the creation of a relationship between consumers and E- commerce. The network of showrooming thus requires consumers to have relationships with physical stores, brand owners as well as e-commerce in order for showrooming to occur. Therefore, academic research must likewise address the entirety of the network if they are to 38

41 expand our understanding of showrooming as a phenomenon. Mutual low levels of trust were further uncovered in the relationship between L Oréal Redken and E-commerce actors, where professionalism and knowledge may ensure some cooperation, but shows signs of lacking in trust and commitment. The relationship between Redken and hairdressers was also shown to feature disproportionate trust and commitment between Redken and hairdressers, with hairdressers not trusting or committing to L Oréal Redken to the same extent. Considering the hairdresser s key role as relationship facilitators, their lower trust and commitment in L Oréal Redken can thus be argued to constitute a problem for L Oréal, who must seek to strengthen their relationship with hairdressers if they are to continue to attract new consumers. The results point to a number of findings ultimately expanding the understanding of how trust and commitment shape relationships in a market experiencing the relational strains of showrooming. 39

42 8. FURTHER RESEARCH The indirect relationship between hairdressers and E-commerce identified in this paper shows the partial dependence of E-commerce on physical stores, a finding which merits closer examination of this particular relationship in future research. The double-edged relationship facilitating role of hairdressers, offering consumers specialized knowledge of a product that however allows consumers to purchase the good elsewhere, is paradoxical and should also provide interesting material for future research. While this paper has emphasized trust and commitment as crucial to the effectiveness of the studied relationships, another area worthy of investigation is assessing which relational characteristics constitute the relationship between hairdressers and E-commerce. This suggested future study is illustrated by the orange arrow in Figure 19 below. Future studies seeking to deepen our understanding of showrooming should also continue to map new networks of showrooming, contributing to a richer discussion of the role of trust and commitment in networks affected by showrooming. Figure 19, Business network model implication a relationship between hairdressers and e-commerce for further research 40